Thinking | 3 August 2020

Victoria’s Stage 4 restrictions: options available to employers

By Alison Baker, Melinda Bell, Iona Goodwin, Simone Aloi, Gemma Hallett and Aerin Hines

Premier Daniel Andrews has imposed Stage 4 restrictions across much of Victoria. A broad range of industries and sectors will now be required to close their workplaces or significantly reduce their capacity across metropolitan Melbourne.

These new measures will present significant challenges to many employers across metropolitan Melbourne. Unfortunately, many employers will already be all too familiar with responding to COVID-19 challenges, including standing down employees and the JobKeeper scheme. However, for some employers, this is new territory.

We examine some of the options available to employers to deal with these challenges below.

Starting point: review the restrictions

As a starting point, it’s critical to have an up-to-date understanding of what the various restrictions impose on your business. While we can expect full details of the restrictions to be provided over coming days, the current advice from the Premier can be found here.

Stand down under the Fair Work Act

Under section 524 of the Fair Work Act, an employer may stand down employees without pay in certain circumstances, including where there is a stoppage of work for which the employer cannot be held responsible and where an employee cannot be usefully employed. Alternate or similar stand down provisions may also be set out in contracts of employment or an applicable enterprise agreement.

Employers that are fully or partially affected by the reintroduced restrictions are able to stand down employees that cannot be usefully employed because their usual functions have ceased. For example, a hardware retailer that cannot open its physical store may stand down retail floor staff that cannot be usefully employed in the click and collect part of the business.

During a period that an employee is stood down, they continue to accrue annual leave, personal leave and long service leave. Employees who are stood down:

  • must be paid for public holidays which fall on a day the employee would ordinarily work if not stood down; and
  • may also request annual leave, paid leave (other than personal and compassionate leave) and long service leave during a stand down period.

Currently, an employee who has been stood down under the Fair Work Act cannot take paid sick and carer’s leave or compassionate leave.

JobKeeper

As part of JobKeeper, the Federal Government amended the Fair Work Act to provide eligible employers who are participating in the JobKeeper scheme – eligible employers – with temporary powers to implement flexibility measures in order to save jobs. The JobKeeper directions are likely to provide many Victorian employers with flexibility to handle the challenges posed by the stage 4 restrictions.

As well as existing powers available to employers, such as the stand down provisions referred to above, the power to require an employee to take annual leave under an enterprise agreement, the ability to direct an employee to work at a different location under a contract of employment, etc, the amendments to the Fair Work Act allow eligible employers to:

  • issue JobKeeper enabling directions, including directions requiring employees to:
    • work reduced hours or days (including to nil) (a JobKeeper enabling stand down direction);
    • undertake alternate duties; or
    • work at an alternate location;
  • request employees to work reduced days or alternate hours of work;
  • request employees to take accrued annual leave; and
  • agree with employees for annual leave to be taken at half pay.

JobKeeper enabling stand downs

During a JobKeeper enabling stand down, the employer must:

  • pay the employee each fortnight at least the greater of:
    • the JobKeeper payment; or
    • the amounts payable to the employee in relation to the performance of work during the fortnight (including all wages, allowances, loadings, penalties, etc); and
  • not reduce the employee’s ordinary hourly rate of pay for each hour of work performed.

However, a JobKeeper enabling stand down direction can only be given, among other restrictions, if the employee cannot be usefully employed for their normal days or hours of work because of changes to business attributable to:

  • the COVID-19 pandemic; or
  • Government initiatives to slow the transmission of COVID-19.

Also, if a JobKeeper enabling stand down direction is given to an employee, the employer must not unreasonably refuse a request by that employee:

  • to engage in reasonable secondary employment; or
  • for additional training or professional development.

JobKeeper enabling directions generally

A JobKeeper enabling direction given to an employee to stand down, undertake alternate duties or work at an alternate location, will be of no effect if either:

  • the direction is unreasonable in all of the circumstances; or
  • the consultation obligation has not been complied with.

The consultation obligation for JobKeeper enabling directions requires an employer to give an employee at least three days’ written notice of its intention to issue the direction and to consult with the employee (or their representative) prior to giving the direction.

A JobKeeper enabling direction given to an employee to undertake alternate duties or work at an alternate location, will also be of no effect unless the employer has information before them that leads them to reasonably believe that the direction is necessary to continue the employment of one or more employees of the employer.

Employees subject to a JobKeeper enabling direction will continue to accrue and take service-related entitlements as if the direction had not been issued. This means that employees will continue to accrue annual and personal leave at their usual rate, and will be entitled to service-related entitlements such as redundancy pay and payments in lieu of notice as if they were working their usual hours of work.

JobKeeper enabling requests

Employers are able to request employees to work reduced days or alternate hours of work, and also request that employees take accrued annual leave (provided that their leave balance does not reduce to below two weeks).

If an employer makes such a request of an employee, the employee must not unreasonably refuse the request.

Other options

As well as the options set out above, it is also open to employers to seek to agree on measures with employees including asking employees to agree to reduce their salary and/or hours of work as a temporary measure. These arrangements should be carefully documented, including by dealing with what will happen if an employee’s employment is terminated before the temporary measure ends.

In a worst case scenario, businesses may need to implement redundancies. In these circumstances, regard should be had to consultation obligations in modern awards and enterprise agreements, as well as, where applicable, the need to consider redeployment.

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